eral rule is that an agreement to extend the time for payment, in order to be valid, must be for a definite time,33 although it seems that no precise date need be fixed,34 it being sufficient that the time can be readily ascertained.35 In order for an extension of time to be binding, the time to which payment is extended must be as definite as is required in a promissory note when originally made.36 However, there is some authority to the contrary, at least in so far as the validity of the extension to preclude an action by the holder before the

[c] Change of articles of loan association. If a loan association whose articles authorize loans which are required to be repaid in monthly installments amend them so as to allow the borrower to omit repayment of any part of the principal until his note becomes due, and a borrower acts on such amendment, it constitutes an extension of time on the monthly installments and discharges a surety. Byers v. Hussey, 4 Colo.

515.

33. U. S.-Varnum v. Bellamy, 28 F. Cas. No. 16,886, 4 McLean 87.

Ala.-David v. Malone, 48 Ala. 428. Compare Cox v. Mobile, etc., R. Co.. 37 Ala. 320.

Cal.-Minor v. Carpenter, (A.) 152

P 737.

Ga.-Alston v. Wingfield, 53 Ga. 18. Ill.-Booth v. Wiley, 102 Ill. 84; Allen v. Breusing, 32 Ill. 505.

Ind. Henry v. Gilliland, 103 Ind. 177, 2 NE 360; Tracy v. Quillen, 65 Ind. 249; Bucklen v. Huff, 53 Ind. 474; Abel v. Alexander, 45 Ind. 523, 15 AmR 270; Matchett v. Anderson Fdy., etc., Works, 29 Ind. A. 207, 64 NE 229, 94 AmSR 272.

Iowa.-Morgan V. Thompson, 60 Iowa 280, 14 NW 306.

Ky.-Alley v. Hopkins, 98 Ky. 668, 34 SW 13, 17 KyL 1227, 56 AmSR 382; Robinson v. Miller, 2 Bush 179. Me.-Derby Line Nat. Bank v. Dow, 79 Me. 275, 9 A 730.

Miss.-Brown v. Prophit, 53 Miss. 649; Rupert v. Grant, 14 Miss. 433. Mont.-Smith v. Freyler, 4 Mont. 489, 1 P 214, 47 AmR 358.

Oh.-Edwards v. Bedford Chair Co., 41 Oh. St. 17; Ward v. Wick, 17 Oh. St. 159; Jenkins v. Clarkson, 7 Oh. 72.

Or.-Findley v. Hill, 8 Or. 247, 34 AmR 578.

Pa.-Siebeneck V. Anchor Sav. Bank, 111 Pa. 187, 2 A 485; People's Bank v. Legrand, 103 Pa. 309, 49 AmR 126; Miller v. Stem, 2 Pa. 286. S. C.-Parnell v. Price, 37 S. C. L. 121.

Tenn.-Cherry v. Miller, 7 Lea 305. Tex.-Workman v. Ray, (Civ. A.) 180 SW 291; Aiken v. Posey, 13 Tex. Civ. A. 607, 35 SW 732.

expiration of the period of extension is concerned.87 And it has been held that, where an agreement for a renewal, made at the time of executing the note, does not specify the time for which the extension is to be allowed, the party should be understood as contemplating that the terms of the original note are to be repeated in the renewal, and that the new period of time allotted for the payment will be of the same duration as that provided in the original note.38

[§ 630] 4. Form of Agreement.

The form of

twenty or thirty days" is sufficiently | "reasonable favor" on the maker's
definite to discharge an indorser. promising to give drafts on his cus-
Hamilton v. Prouty, 50 Wis. 592, 7 tomers is held to be too indefinite to
NW 659, 36 AmR 866. (3) An agree- discharge indorsers. Edwards v. Bed-
ment to extend the time for pay- ford Chair Co., 41 Oh. St. 17. (8) A
ment of a note "until after thresh- promise by the holder of an overdue
ing" is sufficiently definite to dis- note, on payment of overdue interest,
charge a surety. Moulton v. Posten, to hold it for thirty or sixty days,
52 Wis. 169, 8 NW 621. (4) So where "if nothing materially transpires to
the_holder of a note due on Dec. 1, change the status of the security," is
1897, extended the time of payment held to be too indefinite to discharge
until the next fall, it was sufficiently indorsers. Derby Line Nat. Bank v.
definite to extend the time at least to Dow, 79 Me. 275, 9 A 730. (9) Payee's
Sept. 1, 1898. Robson v. Brown, (Tex. agreement that notes might be ex-
Civ. A.) 57 SW 83, 686. (5) An ex- tended until the makers were able to
tension granted to the acceptor of a pay, and that he would not crowd
bill "until the drawer could be heard them, was not a valid extension. La-
from" was sufficiently definite to num v. Harrington, 267 Ill. 57, 107
discharge an indorser. Rupert V. NE 826. (10) The time of extension
Grant, 14 Miss. 433. (6) Extensions is not sufficiently definite where it is
of the time for payment "until the "so long as you keep the interest
summer," and afterward "until the paid." Whiffen v. Hollister, 12 S. D.
fall," were extensions for a definite 68, 80 NW 156.
time, until June 1 and September 1.
Abel v. Alexander, 45 Ind. 523, 15
AmR 270. (7) A contract to extend
the time for the payment of a note
until action thereon is necessary, to
prevent the bar of limitations, is suf-
ficiently definite as to time. Aiken v.
Posey, 13 Tex. Civ. A. 607, 35 SW 732.

[b] Indefinite agreements.—(1) An agreement by the holder of a note to wait for payment "until some time in the summer" was invalid, because it was for an indefinite period. Miller v. Stem, 2 Pa. 286. (2) An agreement to extend the time for the payment of a note until after harvest is void for uncertainty. Findley v. Hill, 8 Or. 247, 34 AmR 578. (3) An agreement to extend the time for the payment of vendor's lien notes, in consideration of the debtor's agreement to pay interest, is not binding, where the debtor did not obligate himself to pay interest for a definite time and there was no agreement to extend the notes for any stated period. Workman v. Ray, (Tex. Civ. A.) 180 SW 291. (4) An agreement extending the time for the payment of notes until the makers can make payment from the proceeds from the sale of lumber, to be sold as fast as possible in the regular course of business, is void for uncertainty as to time of payment. Union Nat. Bank v. Cross, 100 Wis. 174, 75 NW 992 [dist Moulten v. Posten, 52 Wis. 169, 8 NW 621]. (5) An assurance by the holder of a note secured by a deed of trust, or by his agent, to a purchaser from the mortgagor that, if the latter would keep the interest paid there would be no sale of the property, the person to whom such assurance was given assuming no express liability to pay the interest, and there being no agreement on behalf of the holder of the note to extend the time for payment for any definite period, did not amount to a contract to extend the time for payment. Booth V. [a] Definite agreements.-(1) Thus Wiley, 102 I11. 84. (6) An indorsean agreement by a stockholder that ment by the maker across the face of the time for payment of a note due a note after maturity, "I agree to him from the corporation be deferred pay ten per cent. on this bill till until payment of present and future paid," does not extend the time for outside creditors is not void as being payment, and evidence is not admistoo indefinite as to the duration of sible to show that an extension for a the extension. Amback v. Webster definite time was agreed on. Alston Woolen Co., 108 Me. 145, 79 A 381. v. Wingfield, 53 Ga. 18. (7) A prom(2) An extension of a note "for ise by the holder of a note to show

Wis.-Union Nat. Bank v. Cross, 100 Wis. 174, 75 NW 992; Moulton v. Posten, 52 Wis. 169, 8 NW 621; Hamilton v. Prouty, 50 Wis. 592, 7 NW 659, 36 AmR 866.

See generally Principal and Surety [32 Cyc 202].

"In order to extend them, it is plain that there must have been a binding agreement made, changing them, and extending the time of payment to some other definite and fixed time. Mere giving of time indefinitely will not avail. Brandt, Suretyship & G. (2d ed.), § 344." Union Nat. Bank v. Cross, 100 Wis. 174, 181, 75 NW 992.

[c] The words "Renewed July 6," indorsed on the back of a note over the signature of the payee, without naming any year, are too indefinite to extend the time for payment. Brenneke v. Smallman, 2 Cal. A. 306, 83 P 302.

[d] Effect of waiver of extensions. -An indefinite extension of the time for payment, or more than one extension, is not justified by a provision in a note waiving all defenses of the extension of the time for payment given the drawers or the indorsers. Matchett v. Anderson Fdy., etc., Works, 29 Ind. A. 207, 64 NE 229, 94 AmSR 272.

34. McMicken v. Safford, 197 IIL 540, 546, 64 NE 540 [aff 100 Ill. A. 102].

"Without expressly stating such to be their position, plaintiffs in error seem to contend that the evidence should show a fixed, definite time to which the extension of the debt or forbearance to sue should go. We have carefully gone over the authori ties on this question and are satisfied that the rule does not require that the time shall be fixed. An understanding that the debtor shall be indulged for a reasonable time or shall be indulged generally, and an actual forbearance for a reasonable time, will be sufficient." McMicken v. Safford, supra.

35. McMicken v. Safford, 197 Ill. 540, 64 NE 540 [aff 100 Ill. A. 102]. 36. Lanum v. Harrington, 267 Ill. 57, 107 NE 826.

37. Drake v. Pueblo Nat. Bank, 44 Colo. 49, 96 P 999 (distinguishing between the validity of an agreement for an indefinite time as between the parties, and as affecting the liability of a surety). To same effect Nott v. State Nat. Bank, 51 La. Ann. 871, 25 S 475.

[a] Reasonable time. It has been held, at least as between the parties, that an agreement by the payee of a note, after maturity, to forbear suit thereon, in consideration of the signing of the note by a third person, no time of forbearance being agreed on, binds the payee to forbear suit for a reasonable time. Traders' Nat. Bank v. Parker, 130 N. Y. 415, 29 NE 1094.

38. Farmers', etc., Bank v. Laird. 188 Mo. A. 322, 175 SW 116 (holding that an agreement to renew a note

the contract is immaterial if it is binding,3
39 and
the agreement need not be express
40 but may be
inferred from acts, declarations, facts, and cir-
cumstances.41 In other words, it is not necessary
that there be an express agreement extending time,
but it is sufficient if such is the necessary effect of
the agreement.42 The extension may be evidenced
by an indorsement on the note, as where the
words "received, renewed" are indorsed.** So
the consent of the payee of a sight draft to its
acceptance in the future at four months is an
extension of time.45

46

43

[§ 631] 5. Parol Agreement." It is well settled that the time of payment of a bill or note may be extended by an oral agreement, as this does not in any way violate the rule excluding parol evidence to contradict, add to, or vary a written contract, the evidence not being admitted for this purpose, but to prove a new agreement.47 Most of the courts have held that such an agreement is binding, whether the consideration for the exis not void for uncertainty because N. Y.-Kane v. it does not state how many renewals 132, 2 NE 874. there may be or for how long) 39.

522.

Jones v. Fleming, 15 La. Ann.

40. Revell v. Thrash, 132 N. C. 803, 44 SE 596.

tension is executed, as by the payment of interest in advance, or is a mere executory oral promise to pay.48 However, it has been held in some states that an oral promise extending the time of payment of a note is not binding when it is based only on an oral promise to pay interest or other consideration for the extension.49 So statutes in some jurisdictions change the rule by providing that a contract in writing may be altered by an executed oral agreement and not otherwise.50 Where a note contained a stipulation waiving notice of an extension of time, a subsequent verbal agreement, without consideration, that no extension is to be given, will not be upheld.51

[ 632] 6. Parties to Agreement.52 An agreement for extension, to discharge indorsers, must be made by the holder with the maker or the acceptor.53 It follows that an agreement for forbearance between the holder of a note and a creditor of the maker, to which the maker is not a party, will not discharge an indorser,54 and that an agreeCortesy, 100 N. Y. | ment for extending the time of payment of a note, made before maturity and signed only by the maker, is of no effect. Hass v. Lobstein, 108 111. A. 217. (2) However, an extension agreement signed by the maker of the notes, but not signed by the holder thereof, but accepted and acted on by such holder, is valid. Abraham Lincoln Bldg., etc., Assoc. v. Zuelk, 124 Ill. A. 109.

N. D.-Foster v. Furlong, 8 N. D. 282, 78 NW 986.

Oh.-Thompson v. Marshall, 2 Oh. Dec. (Reprint) 506, 3 WestLMonth 386. 41. Brooks v. Wright, 13 Allen Vt.-Morse v. Huntington, 40 Vt. (Mass.) 72. See also infra §§ 636-488; Dunham v. Downer, 31 Vt. 249; 642. People's Bank v. Pearsons, 30 Vt. 711. Wis. Grace v. Lynch, 80 Wis. 166, 49 NW 751.

42. Lambert v. Shitler, 62 Iowa 72, 17 NW 187; Brooks v. Wright, 13 Allen (Mass.) 72; Stone's River Nat. Bank v. Walter, 104 Tenn. 11, 55 SW 301; Union Bank V. McClung, 9 Humphr. (Tenn.) 98.

43. Cook v. Landrum, 82 SW 585, 26 KyL 813; Warren Academy v. Starrett, 15 Me. 443.

[a] An indorsement made by the maker several years after maturity, stating that he renewed the promise, constitutes a renewal. Warren Academy v. Starrett, 15 Me. 443.

[b] The genuineness of an indorsement on the back of a note extending its time of payment will be inferred from the fact that the indulgence therein provided for was actually given. Cook v. Landrum, 82 SW 585, 26 KyL 813.

44. Lime Rock Bank v. Mallett, 34 Me. 547, 56 AmD 673.

[a] Thus indorsements on a promissory note of the words "Received, Renewed," bearing successive dates, all subsequent to the maturity of the note, are equivalent in each case to, "Received the interest for a renewal" of the note, in its original terms, from this date, and show renewal. Lime Rock Bank v. Mallett, 34 Me. 547, 56 AmD 673.

45. 382.

Burthe v. Donaldson, 15 La.

46. Generally see Frauds, Statute of [20 Cyc 147].

47. U. S.-Cooper v. Gibbs, 6 F. Cas. No. 3,194, 4 McLean 396.

Ala. Ferguson v. Hill, 3 Stew. 485, 21 AmD 641; Starr Piano Co. v. Baker, 8 Ala. A. 449, 457, 62 S 549 [cit Cyc].

III.-Myers v. Fairbury First Nat. Bank, 78 Ill. 257; Danforth v. Semple, 73 I. 170; Pierce v. Hasbrouck, 49 Ill. 23; Flynn v. Mudd, 27 Ill. 323; Warner v. Campbell, 26 Ill. 282; Reynolds v. Barnard, 36 Ill. A. 218.

Contra Fagan v. Elam, 2 Ky. Op. 365.

[a] The fact that paper is secured by a real estate or chattel mortgage does not prevent the time of payment from being extended by parol agreement. Flanders v. Barstow, 18 Me. 357; Kane v. Cortesy, 100 N. Y. 132, 2 NE 874.

48. Bailey v. Adams, 10 N. H. 162; Grafton Bank v. Woodward, 5 N. H. 99, 20 AmD 566; Thompson v. Marshall, 2 Oh. Dec. (Reprint) 506, 3 WestLMonth 386.

49. Berry v. Pullen, 69 Me. 101, 31 AmR 248.

50. Henehan v. Hart, 127 Cal. 656,
60 P 426 (holding that the payee of a
note was not bound by an oral agree-
ment to extend the time of payment
on condition that the maker should
pay the same rate of interest during
the extension as that stipulated in
the note, such agreement being un-
executed); Foster v. Furlong, 8 N. D.
282, 78 NW 986 (holding thereunder
that the time of payment of a note
may be extended by parol agreement,
where the consideration is the actual
payment of interest in advance, or
other executed consideration, but not
where the consideration is an oral
promise to pay interest).

51. Milan First Nat. Bank V.
Wells, 98 Mo. A. 573, 73 SW 293.
52. Cross references:
Authority of bank cashier to extend
time so as to discharge indorser
see Banks and Banking § 163.
Power of partner to renew see Part-
nership [30 Cyc 515].

53. Ill-Hass v. Lobstein, 108 Ill.
A. 217.

Ind. Cheek v. Glass, 3 Ind. 286. Mich. Koons v. Vauconsant, 129 Mich. 260, 88 NW 630, 95 AmSR 438. Nebr.-Parker v. Taylor, 3 Nebr. (Unoff.) 318, 91 NW 537 (holding that, where the holder of a note sold the same and extended the time in which the purchaser was to pay him for the note beyond the period when the note became due, there was no extension of time of payment of the note).

N. J.-Herbert v. Servin, 41 N. J. L. 225.

Okl.-Adams v. Ferguson, 44 Okl. 544, 147 P 772.

[a] Illustrations.-(1) An agree

[b] Indorsement of receipt of interest.-An indorsement on a matured note made by the holder, acknowledging the receipt of interest up to a certain date, and agreeing that the note shall stand until that time without suit, is insufficient to show an agreement to extend the time made with the principal maker, as the indorsement does not show by whom the interest was paid. Cheek v. Glass, 3 Ind. 286.

[c] The fact that a joint maker of a note signed the name of his comaker to a renewal note, thereby misleading the payee, will not keep the debt alive as to such comaker if such signing was without authority and there is nothing on which to base an estoppel. Koons v. Vauconsant, 129 Mich. 260, 88 NW 630, 95 AmSR 438.

[d] But the rule that a note made payable to a dead man is void does not apply to a note made in renewal of one executed before the payee's death. Dark v. Middlebrook, (Tex. Civ. A.) 45 SW 963.

54. Walker V. Washington Title Ins. Co., 19 App. (D. C.) 575; Hefford v. Morton, 11 La. 115; Avirett v. Barnhart, 86 Md. 545, 39 A 532; Herbert v. Servin, 41 N. J. L. 225.

[a] Evidence of maker's assent. Where the holder of a note and other creditors of the maker agreed to extend the time for payment of their claims, the maker's acceptance thereto will not be presumed, where he was bound by the terms thereof to pay a greater interest than he otherwise would have to pay. And in an action against an indorser of such note, the mere fact that the original of the agreement extending the time of payment of claims is not produced at the trial-a copy only being produced-will not justify the inference that the maker accepted the agreement. Hefford v. Morton, 11 La. 115.

[b] Alteration by extension without maker's consent. The extension of the time of payment of a note by the holder by an indorsement thereon, without the knowledge or the consent of the maker, is a material alteration and ineffectual, so that one taking the note and the mortgage securing it, after the original, but before the extended, time of payment has expired, takes them subject to

ment between indorser and indorsee, without the privity of the maker or the acceptor, will not discharge other indorsers.55 So the payee of a note who has sold and transferred it cannot extend the time of its payment.56 But the agreement may be made with a maker who has been discharged in bankruptcy.57

Agents. If an agreement extending the time of payment of a bill or note is made by an agent without authority, express or implied, it does not postpone the right of action or discharge indorsers or sureties.58 Whether an agent has power to extend is treated elsewhere in this work.59

[§ 633] C. When Extension Implied—1. In General. Where there is no express agreement to renew, the question often presents itself as to whether certain acts of the parties amount to such an agreement, that is, whether an agreement to renew may be implied therefrom. This question is sometimes difficult of solution, but there are a number of more or less well settled rules in regard thereto.60 The mere failure to return a note sent as a renewal note will not be construed as an agreement to renew.61 So the demanding of payment by a cerpayments made to the assignor not indorsed on the note. Avirett v. Barnhart, 86 Md. 545, 39 A 532.

55. Bagley v. Buzzell, 19 Me. 88; Wright v. Independence Nat. Bank, 96 Va. 728, 32 SE 459, 70 AmSR 889; Frazer v. Jordan, 8 E. & B. 303, 92 ECL 303, 120 Reprint 113.

56. Zobel v. Bauersachs, 55 Nebr. 20, 75 NW 43.

57. Post v. Losey, 111 Ind. 74, 12 NE 121, 60 AmR 677.

58. Lawrence v. Johnson, 64 Ill. 351; Ritch v. Smith, 82 N. Y. 627. 59. See Agency § 286.

60. See infra §§ 634-642. 61. Lyman v. Chamard, 1 L. C. Jur. 285.

62.

Hurst v. Trow Printing, etc., Co., 2 Misc. 361, 22 NYS 371, 30 AbbNCas 1 [aff 142 N. Y. 637 mem, 37 NE 566 mem].

63. Warrensburg Co-op. Bldg. Assoc. v. Zoll, 83 Mo. 94.

64. Benton v. German-American Nat. Bank, 45 Nebr. 850, 64 NW 227. 65. Mutual Nat. Bank v. Coco, 107 La. 268, 31 S 628.

66. U. S.-Ross v. Jones, 22 Wall. 576, 22 L. ed. 730; McLemore v. Pow. ell, 12 Wheat. 554, 6 L. ed. 726.

Conn.-Lockwood v. Crawford, 18 Conn. 361.

Ky.-Higgins v. Morrison, 4 Dana

100.

La.-Moore v. Britton, 22 La. Ann. 64; Buckner v. Watt, 19 La. 211.

Mass.-Way v. Dunham, 166 Mass. 263, 44 NE 220.

Mo.-Warrensburg Co-op. Bldg. Assoc. v. Zoll, 83 Mo. 94; Globe Mut. Ins. Co. v. Carson, 31 Mo. 218.

N. Y.-Utica Bank V. Ives, 17 Wend. 501; Powell V. Waters, 17 Johns. 176.

N. C.-State Bank v. Wilson, 12 N. C. 484.

Tenn.-Cherry v. Miller, 7 Lea 305. Tex.-Caskey v. Douglas, (Civ. A.) 95 SW 562; Guerguin v. Boone, 33 Tex. Civ. A. 622, 77 SW 630.

Ont.-Thompson v. McDonald, 17 U. C. Q. B. 304.

[a] Thus mere consent of the holder of a note to the maker's going to another city to procure the money with which to pay the note was not an extension of time. Boutte v. Martin, 16 La. 133.

67. Payment of interest as consideration for extension see infra § 647.

69

[635] 3. Receiving Payment of Interest.67 No doubt all of the courts agree that proof that the holder of a bill or note, at or after its maturity, received interest in advance for a period beyond its maturity is not conclusive evidence of an agreement extending the time of payment.68 It is generally held, however, that such payment is prima facie evidence of such an agreement, without regard Ariz.-McGlassen v. Tyrrell, 5 Ariz. | of interest under the belief that he 51, 44 P 1088. is purchasing extension for that Cal.-Hellier v. Russell, 136 Cal. length of time, acceptance of such 143, 68 P 581; Kellam v. Brode, 1 Cal. payments with knowledge of this beA. 315, 82 P 213. lief operating as an extension. Preston v. Henning, 6 Bush (Ky.) 556. (2) "Where a creditor, without inadvertence or mistake, receives a payment of interest in advance on the note of a debtor, and does not expressly reserve the right to sue before the expiration of the period for which interest is taken, there is a contract created to extend the time of payment during the period for which interest is paid." British Columbia Bank v. Jeffs, 18 Wash, 135, 137, 51 P 348, 63 AmSR 875.

Me.-Mariners' Bank v, Abbott, 28 Me. 280: Freeman's Bank v. Rollins, 13 Me. 202.

Mass.-Haydenville Sav. Bank V.
Parsons, 138 Mass. 53; Oxford Bank
v. Lewis, 8 Pick. 458.

Mich.-Morse V. Blanchard, 117
Mich. 37, 75 NW 93.

Miss.-Brown v. Prophit, 53 Miss.

649.

Mo.-St. Joseph F. & M. Ins. Co. v.
Hauck, 71 Mo. 465; Springfield First
Nat. Bank v. Leavitt, 65 Mo. 562;
Hosea v. Rowley, 57 Mo. 357; Miners',
etc., Bank v. Rogers, 123 Mo. A. 569,
100 SW 534; Américan Nat. Bank v.
Love, 62 Mo. A. 378; Nevada First
Nat. Bank v. Gardner, 57 Mo. A. 268;
Bowling Green Citizens' Bank V.
Moorman, 38 Mo. A. 484; Russell v.
Brown, 21 Mo. A. 51.

N. H.-Crosby v. Wyatt, 10 N. H.
318.

Oh.-Denison Univ. v. Manning, 65
Oh. St. 138, 61 NE 706; Gard v. Neff,
39 Oh. St. 607.
Second Nat.
Bank v. Graham, 246 Pa. 256, 262, 92
A 198 [cit Cyc]; Brest v. Brooks, 38
Pa. Co. 522. Compare York Bank v.
Webster, 242 Pa. 128, 134, 88 A 911
[quot Cyc] (facts must be proved).

Pa.-Mechanicsburg

Tex.-Maddox v. Lewis, 12 Tex.
Civ. A. 424, 34 SW 647.

[a] Thus where the holder of a
note agreed to extend credit on re-
newal notes made by the same par-
ties, and the maker paid interest for
an extended time, and prior thereto
the surety had died, which fact was
then unknown to the holder, and the
renewal notes were never executed,
it was held that no agreement to ex-
tend the time of payment could be
inferred from the mere payment of
the interest under the circumstances.
Uniontown Bank v. Mackey, 140 U. S.
220, 11 SCt 844, 35 L. ed. 485.

[b] Payments of interest in advance on a note by the principal debtor do not conclusively determine that there has been such an extension of time. Miners', etc., & Merchants' Bank v. Rogers, 123 Mo. A. 569, 100 SW 534; Milam First Nat. Bank v. Wells, 98 Mo. A. 573, 73 SW 293; Brest v. Brooks, 38 Pa. Co. 522.

[c] But the rule does not apply:

68. U. S.-Uniontown Bank V. Mackey, 140 U. S. 220, 11 SCt 844, 35 (1) Where the principal obligor on a L. ed. 485. note advances six annual payments

for

[d] Effect of statute-Time payment of a note is not extended by the acceptance of interest in advance to a time beyond that at which the note is due on its face, so as to prevent action before expiration of the time for which interest was paid, Civ. Code § 1698 providing that a contract in writing may be altered by a contract in writing or by an executed oral agreement, but not otherwise. Brenneke v. Smallman, 2 Cal. A. 306, 83 P 302.

69. Conn. Skelly v. Bristol Sav. Bank, 63 Conn. 83, 26 A 474, 38 AmSR 340, 19 LRA 599.

Ga.-Randolph v. Fleming, 59 Ga. 776; Scott v. Saffold, 37 Ga. 384. See also Heath v. Achey, 96 Ga. 438, 23 SE 396. Compare Williams V. Wright, 69 Ga. 759.

Ill-Warner v. Campbell, 26 Ill.

282.

Ind. Starret v. Burkhalter, 86 Ind. 439; Mennet v. Grisard, 79 Ind. 222; Woodburn V. Carter, 50 Ind. 376: Schieber v. Traudt, 19 Ind. A. 349, 49 NE 605. Compare Cheek v. Glass, 3 Ind. 286.

Ky.-Farmers' Bank v. Wickliffe, 134 Ky. 627, 121 SW 498.

Minn.-St. Paul Trust Co. v. St. Paul Chamber of Commerce, 64 Minn. 439, 67 NW 350.

N. H.-New Hampshire Sav. Bank v. Colcord, 15 N. H. 119, 41 AmD 685; New Hampshire Sav. Bank v. Ela, 11 N. H. 335; Crosby v. Wyatt, 10 N. H. 318.

N. C.-Hollingsworth v. Tomlinson, 108 N. C. 245, 12 SE 989.

Oh.-Denison Univ. v. Manning, 65 Oh. St. 138, 61 NE 706; Atkinson v. Talbott, 1 Disn. 111, 12 Oh. Dec. (Reprint) 518. See also Gard v. Neff, 39 Oh. St. 607. Compare Jones v. Brown, 11 Oh. St. 601; Peuterman v..

$$ 635-636]

74

BILLS AND NOTES

rate than the party is legally bound to pay," or
the payment of interest for the year, made a few
days before the end of the year when the note
matured,78 does not show an extension.

[ 636] 4. Taking New Notes or Other Securi-
ties.79 If the holder of a bill or a note takes from
the maker a new bill or note payable at a future
time in the place of it, whether he surrenders the
old bill or note or not, and does not take the same
merely as collateral and without any agreement for
delay, there is an extension of the time of pay-
ment which will preclude him from suing until the
new bill or note matures, and will release indorsers
or sureties on the old bill or note who do not

to the length of time for which the interest is
and
71
in Maine, Massachusetts,72
paid;70 but
Missouri 73 it is held that it is neither prima facie
nor sufficient evidence, although it may be suffi-
cient with other circumstances to take the case
to the jury. Indorsements on a note payable on
a certain day, showing merely that interest has
been paid annually on the note for several years
since its maturity, are no proof that an extension
75 And an agreement for ex-
has been agreed on.7
tension cannot be inferred from the mere fact
that the holder received payments of interest after
its maturity.76 So the payment of interest up to
the day of such payment, even though at a greater
Dorman, 8 Oh. Dec. (Reprint) 391, | other's money, and where it is paid
in advance to a definite time, in the
it
of other explanation,
7 CincLBul 281.
absence
seems to be necessarily implied that
the lender upon his part has agreed
that the borrower may use it at the
agreed rate for such time, and that
the borrower upon his part has sur-
borrowed,
the amount
time,
such
rendered his right to pay off, within
thereby relieving himself from the
Lawrence v.
payment of interest."
Thom, 9 Wyo. 414, 420, 64 P 339.
[c] Although the sum is insuf-
the
cover the interest to
cient to
designated time the indorsement is
prima facie evidence that the pay-
to
as interest
was received
ment
such time. Lazelle v. Miller, 40 Or.
549, 67 P 307.

Or.-Lazelle v. Miller, 40 Or. 549, 67 P 307.

Second Nat. Pa.-Mechanicsburg Bank v. Graham, 246 Pa. 256, 262, 92 A 198 [cit Cyc]; Siebeneck v. Anchor Sav. Bank, 111 Pa. 187, 2 A 485; Walters v. Swallow, 6 Whart.

446.

Tex.

Nat.

Tex.-Maddox v. Lewis, 12
Civ. A. 424, 34 SW 647.
V. Deseret
Utah.-Walley
Bank, 14 Utah 305, 47 P 147.
Vt.-People's Bank v. Pearsons, 30
Vt. 711. Compare Middlebury Bank
v. Bingham, 33 Vt. 621.

Wyo.-Lawrence v. Thom, 9 Wyo. 414, 64 P 339.

Ont.-Ryan v. McKerral, 15 Ont.

460.

[a] Illustration. The receipt by the holder of a note, past due, of interest to a date fifteen days subsequent to such payment, and the indorsement of such receipt on the note, is evidence competent to be received in support of a claim of a contract to extend the time of payment of the note, but does not imply such contract as matter of law; and where the person who made the paythe trial to the ment testifies at transaction of payment and is silent as to any request for extension and any agreement to extend, and the recipient of the money on the witness stand denies that any such request or agreement was made, a finding by the jury in favor of the claimed extension should be set aside as not supthe evidence. Denison ported by Univ. v. Manning, 65 Oh. St. 138, 61 NE 706.

[b] Reasons for rule.-(1) "Where an individual pays interest upon a note in advance, he does so for the purpose of procuring delay; and it is believed that it is generally understood between the parties, unless express reservation, there is some that the creditor has no right to call for the principal, until the expiraThe payment of tion of the time. . . . the interest is the consideration of such an agreement, implied from the transaction itself, if not distinctly The sum received is a expressed. payment, not of a part of the principal, or generally, but, specially, of And interest, for a certain period. why is this payment made? Clearly to obtain the delay, and for nothing else. The very idea of a payment of interest in advance pre-supposes that delay of payment of the principal is The interto be given for the time. est thus paid is not expected to be applied afterwards to the principal, or paid back on any contingency, unless there is some agreement of the Nor are we parties to that effect. of any principle upon which the maker, after such a payment of interest in advance, could, before the expiration of the time, on offering to

aware

the balance, require the creditor pay to apply any portion of the interest so paid, in discharge of the princiCrosby v. Wyatt, 10 N. H. 318, pal. payment (2) "Interest is 322. made for the privilege of using an

a

[a]

When presumption rebutted.-
"But to hold that the mere silence
of the parties, the absence of any
request to extend, and the like, are
circumstances which overthrow the
presumption, would be equivalent to
holding that the prima facie case
must fail unless proof is made of an
Brit-
express agreement to extend."
ish Columbia Bank v. Jeffs, 18 Wash.
condition.-An
135, 141, 51 P 348, 63 AmSR 875.
[e] Unperformed
agreement for an extension of the
time of payment of a note cannot be
holder never
inferred from the mere payment of
interest,
agreed to extend payment except on
receiving a new note signed by both
Uniontown Bank
makers of the old one, which note
was never given.
v. Mackey, 140 U. S. 220, 11 SCt 844,
35 L. ed. 485.

where the

[f] Election to apply as principal
or future interest.-Where the maker
of a note previous to its maturity
sent the holder a letter containing a
draft, and stating that he hoped to be
able to pay the note soon, in which
case the amount of the draft was to
be applied in part payment, but that
if he could do so the holder should
take that sum as interest in advance
for three months after the maturity
of the note, and the holder made no
reply to the letter, but procured the
draft to be cashed and held the pro-
ceeds without making any application
thereof on the note until the expira-
tion of three months after the ma-
turity of the note, when he indorsed
it as three months' interest thereon,
it was held that these facts did not
Middlebury
import a binding contract to delay
the payment of the note.
Bank v. Bingham, 33 Vt. 621.
instruction.-Black
[g] Proper
River Falls First Nat. Bank v. Jones,
92 Wis. 36, 65 NW 861.
[h] Improper instruction.-Star-
ret v. Burkhalter, 86 Ind. 439.
Bank

v.
Columbia
British
70.
Jeffs, 18 Wash. 135, 141, 51 P 348, 63
AmSR 875 (where the court said:
"The prepayment was for a period of
six days only, but that can make no
difference; it rests on principle, and
the result is the same, whether the
Mariners' Bank v. Abbott, 28
extension is for a day or a year").
Me. 280; Crosby v. Wyatt, 23 Me. 156;
Freeman's Bank v. Rollins, 13 Me.
202.

71.

72. Haydenville Sav. Bank v. Parsons, 138 Mass. 53; Agricultural Bank v. Bishop, 6 Gray (Mass.) 317; Central Bank v. Willard, 17 Pick. (Mass.) 150, 28 AmD 284; Blackstone Bank v. on wrapper. [a] Indorsement Hill, 10 Pick. (Mass.) 129; Oxford Bank v. Lewis, 8 Pick. (Mass.) 458. counted by it had become due, and on But where a bank, after a note disthe application of the promisor for a renewal, indorsed on the wrapper of the note the words, "renewed for three months," and the promisor paid the interest in advance, but the note was retained by the bank and no new note was given, it was held that the indorsement did not become a part of the note, and that the bank was not thereby disabled from commencCentral ing an action on the note before the Bank v. Willard, 17 Pick. (Mass.) expiration of three months. 150, 28 AmD 284.

73. Springfield First Nat. Bank v. Leavitt, 65 Mo. 562; Hosea v. Rowv. Love, 62 Mo. A. 378; Nevada First ley, 57 Mo. 357; American Nat. Bank Nat. Bank v. Gardner, 57 Mo. A. 268; A. 484. Citizens' Bank v. Moorman, 38 Mo.

"But while the taking of interest to a definite period of time in advance of the time when the note fell due port. such promise, if the promise will be a good consideration to supwas in fact made, it will not be of a promise, because this fact of itself does not from suing." the creditor itself evidence of such disable A. 51, v. Brown, 21 Mo. 55. Russell 74. Mariners' Bank v. Abbott, 28 effect Lawrence Me. 280; Russell v. Brown, 21 Mo. A. 51. Thom, 9 Wyo. 414, 64 P 339.

To

same

V.

[a] Indorsement of interest "for a renewal," etc.-The indorsement of. interest for a stipulated time on a a renewal," or "to renew the balmatured note, with the words "for ance," or "balance renewed," is suffiMariners' Bank v. cient to authorize the jury to find an agreement for an extension of the time of payment. 75. Dyar v. Shenkberg, 93 Iowa Abbott, 28 Me. 280. 668, 154, 61 NW 403; Alley v. Hopkins, 98 Ky. 34 SW 13, 17 KyL 1227; Fortineau v. Boissiere, 18 La. 470.

Thus the mere fact that at [a] end of each year for two years therethe maturity of a note, and at the after, the maker paid to the holder interest for the year past, whether at a legal or a usurious rate, does not show an agreement for a definite exAlley v. Hopkins, 98 such payment. tension of time in consideration of Ky. 668, 34 SW 13, 17 KyL 1227, 56 AmSR 382.

76. Amberg v. Nachtway, 92 Ill. 77. Stearns v, Sweet, 78 Ill. 446. A. 608. To same effect Amberg v. Nachtway, 92 Ill. A. 608.

78. Weaver v. Prebaster, 37 Ind. note as bill A. 582, 77 NE 674. 79. New seq. stituting payment see infra § 793 et

or

con

consent.80 This is true, although the new note is
payable one day after date.81 So the rule applies
where the holder, at or after maturity, takes time
drafts or acceptances 82
or a postdated check.83
However, the taking of a new note is not con-
clusive evidence of an extension.84 But the holder
80. U. S.-McLean v. Lafayette | indorser.-Where
Bank, 16 F. Cas. No. 8,888, 3 McLean
587.
Cal.-Bridge v. Connecticut Mut. I.
Ins. Co., 167 Cal. 774, 782, 141 P 375
[cit Cyc].

Ga.-Rhodes v. Hart, 51 Ga. 320. Kan.-Olathe First Nat. Bank v. Livermore, 90 Kan. 395, 397, 133 P 734, 47 LRANS 274 [cit Cyc]; Hutchins v. Stanley, 88 Kan. 739, 129 P 1180; Schnitzler v. Wichita Fourth Nat. Bank, 1 Kan. A. 674, 42 P 496. Ky.-Norton v. Roberts, 4 T. B. Mon. 491.

La.-Shaw v. Nolan, 8 La. Ann. 25.
Mich.-Sage v. Walker, 12 Mich.

425.

Miss.-Green v. Skinner, 72 Miss. 254, 16 S 378.

Mo.-Springfield First Nat. Bank v. Leavitt, 65 Mo. 562.

N. Y.-In re Utica Nat. Brewing Co., 154 N. Y. 268, 48 NE 521; Hubbard v. Gurney, 64 N. Y. 457 [dist Cary v. White, 52 N. Y. 138]; Hart v. Hudson, 13 N. Y. Super. 294; Eisner v. Keller, 3 Daly 485; Platt v. Stark, 2 Hilt. 399; Kelty v. Jenkins, 1 Hilt. 73; Moyer v. Urtel, 9 NYSt 667; Fellows v. Prentiss, 3 Den. 512, 45 AmD 484; Myers v. Welles, 5 Hill 463. Compare Newburgh Nat. Bank V. Bigler, 18 Hun 400 [aff 83 N. Y. 51]. Contra Taylor v. Allen, 36 Barb. 294. N. C.-Canton Chemical Co. v. Pegram, 112 N. C. 614, 17 SE 298.

Pa. In re Moritz, 239 Pa. 375, 86 A 875; Slaymaker v. Gundacker, 10 Serg. & R. 75; Maples v. Hicks, Brightly 56, 3 PaLJ 17, 244. But see Weakly v. Bell, 9 Watts 273, 36 AmD 116.

Tenn.-Hill v. Bostick, 10 Yerg.

410.

Vt.-Michigan State Bank v. Leavenworth, 28 Vt. 209. Compare Ripley v. Greenleaf, 2 Vt. 129.

Va.-State Sav. Bank v. Baker, 93 Va. 510, 25 SE 550; Stuart v. Lancaster, 84 Va. 772, 6 SE 139; Callaway v. Price, 32 Gratt. (73 Va.) 1; Armistead v. Ward, 2 Patt. & H. 504.

Wash.-Seattle First Nat. Bank v. Harris, 7 Wash. 139. 34 P 466.

Wis.-Johnston Harvester Co. v. McLean, 57 Wis. 258, 15 NW 177.

Eng-Kendrick v. Lomax, 2 Cromp. & J. 405, 149 Reprint 172; Walton v. Mascall, 13 M. & W. 452, 153 Reprint 188. Contra Pring v. Clarkson, 1 B. & C. 14, 8 ECL 7, 107 Reprint 6. Ont.-Shepley v. Hurd, 3 Ont. A.

549.

Compare Merchants' Trust, etc., Co v. Jones, 95 Me. 335, 50 A 48, 85 AmSR 412 (where under the facts proved it was held that the rule could not be applied).

[a] Thus, where the holder of à note wrote to the indorsers, requesting them to give a new note in renewal, and a new note was accordingly made and indorsed by the same parties and sent to the holder with a request for the return of the old note. No notice was taken of this request, nor were the indorsers notified when the new note fell due and remained unpaid. It was held that these facts discharged the liability of the indorsers on the old note. Sage v. Walker, 12 Mich. 425.

of a note may be estopped to deny that it' was taken in renewal of another note 85 and in like manner the maker may be estopped.86

an

[§ 637] 5. Taking as Collateral Security. Both under the Negotiable Instruments Law 87 and independent thereof,88 there is no extension of a bill or indorser on a in an action against him on a promisnote is discharged by the taking of a sory note, has availed himself by renewal note and a surrender of the plea and proof of a subsequent note old note, thereby extending the time for the same amount as given in reof payment, he cannot be made liable newal thereof, and has prevailed on by a redelivery of the old note for that defense, is estopped to set up. the purpose of holding him thereon. in defense against an action by the Green v. Skinner, 72 Miss. 254, 16 S same plaintiff on the second note, 378. that he gave it on a condition which never was fulfilled, although he is not estopped to set up a total or partial failure or want of consideration in the original note).

[d] An indorsement on a canceled note is revived and becomes enforceable on a repudiation by the indorser of an indorsement on a note given in liquidation of the canceled obligation, provided the indorser has not by virtue of the cancellation of his original obligation surrendered collateral and thus changed his position. Commercial L. & T. Co. v. Mallers, 141 Ill. A. 460 [aff 237 Ill. 119, 86 NE 728, 242 Ill. 50, 89 NE 661, 134 AmSR 306, 17 AnnCas 224].

81. Shaw v. Nolan, 8 La. Ann. 25;
Fellows v. Prentiss, 3 Den. (N. Y.)
512, 45 AmD 484.

82. U. S.-Cooper v. Gibbs, 6 F.
Cas. No. 3,194, 4 McLean 396; Sev-
enth Ward Bank v. Hanrick, 21 F.
Cas. No. 12,678, 2 Story 416.
Miss.-Rupert v. Grant, 14 Miss.

433.

N. H.-Woodman v. Eastman, 10
N. H. 359.

N. Y.-Pomeroy v. Tanner, 70 N. Y.
547.

Oh-Atkinson v. Talbott, 1 Disn. 111, 12 Oh. Dec. (Reprint) 518.

Eng.-Kendrick v. Lomax, 2 Cromp. & J. 405, 149 Reprint 172; Gould v. Robson, 8 East 576, 103 Reprint 463.

[a] But taking a draft fraudulent-
ly diverted from the purpose for
which it was drawn, in payment of a
preëxisting debt evidenced by notes
or drafts, is not an extension of the
time of payment of the debt, so as to
make the holder a holder for value.
Moore v. Ryder, 65 N. Y. 438.

83. Place v. McIlvain, 38 N. Y.
96, 97 AmD 777 [aff 1 Daly 266];
Okie v. Spencer, 2 Whart. (Pa.) 253,
30 AmD 251 [aff 1 Miles 299].
84.

Elwood v. Deifendorf, 5 Barb.
(N. Y.) 398; Allentown Nat. Bank v.
Clay Product Supply Co., 217 Pa. 128,
66 A 252; Armistead v. Ward, 2 Patt.
& H. (Va.) 504; Molson's Bank v.
McDonald, 40 U. C. Q. B. 529.
Taking new note as collateral see
infra § 637.

85. Hooker v. Hubbard, 97 Mass.
175. See also Dewey v. Bell, 5 Allen
(Mass.) 165 (holding that, if the mak-
er of a note at its maturity delivers
to an agent another note to be used
in renewal thereof, and the holder
refuses to accept the same in renewal,
but takes it as collateral, and then
uses it as his own by procuring it to
be discounted, he is estopped to say
that he did not accept it for the pur-
pose for which it was given, and
after paying the same he may main-
tain an action on it, although he has
afterward refused to deliver up the
original note to the maker).

87. Mechanicsburg Second Nat. Bank v. Graham, 246 Pa. 256, 92 A 198.

88. U. S.-Cooper v. Gibbs, 6 F.
Cas. No. 3,194, 4 McLean 396.
Colo.-Fisher v. Denver Nat. Bank,
22 Colo. 373, 45 P 440.

Conn.-Continental L. Ins. Co. v.
Barber, 50 Conn. 567. Compare Auff-
mordt v. Stevens, 46 Conn. 411.
Ga.-Pennington v. Watson, Dudl.
Ill. Chattanooga Sav. Bank V.
Lumby, 185 Ill. A. 111.

97.

Ky. Sparks v. Hall, 4 J. J. Marsh. 35; Norton v. Roberts, 4 T. B. Mon. 491.

40 Md.

La.-Shaw v. Nolan, 8 La. Ann. 25; Buckner v. Watt, 19 La. 211. Md.-Brengle v. Bushey, 141, 17 AmR 586. Mass. Sigourney v. Wetherell, 6 Metc. 553; Hurd v. Little, 12 Mass. 502.

Mich.-Farmers', etc., Bank v. Kercheval, 2 Mich. 504.

Miss.-Wade v. Staunton, 6 Miss.

631.

Mo.-Globe Mut. Ins. Co. v. Carson, 31 Mo. 218; Noll v. Oberhellmann, 20 Mo. A. 336.

N. Y.-Cary v. White, 52 N. Y. 138; Remsen v. Graves, 41 N. Y. 471; State Nat. Bank v. Coykendall, 58 Hun 205, 12 NYS 334 [aff 132 N. Y. 597 mem, 30 NE 1151 mem]; Taylor v. Allen, 36 Barb. 294; Williams v. Townsend, 14 N. Y. Super. 411; Albany County Bank v. Scott, 4 NYSt 768; Utica Bank v. Ives, 17 Wend. 501; Mohawk Bank v. Van Horne, 7 Wend. 117.

Oh.-Edwards V. Bedford Chair Co., 41 Oh. St. 17.

Pa.-Kemmerer's App., 102 Pa. 558; Weakly v. Bell, 9 Watts 273, 36 AmD 116; Okie v. Spencer, 1 Whart. 253. 30 AmD 251 [aff 1 Miles 299]; Maples v. Hicks, Brightly 56, 3 PaLJ 244.

Vt.-Austin v. Curtis, 31 Vt. 64 [overr in so far as they are inconsistent Michigan State Bank v. Leavenworth, 28 Vt. 209; Atkinson V. Brooks, 26 Vt. 569, 62 AmD 592].

Va.-Bacon v. Bacon, 94 Vt. 686. 27 SE 576.

Wash.-Seattle First Nat. Bank v.
Harris, 7 Wash. 139, 34 P 466.
Eng.-Pring v. Clarkson, 1 B. & C.
14, 8 ECL 7, 107 Reprint 6.1

Ont.-Dominion Bank v. Oliver, 17
Ont. 402.

[a] Whether collateral or extension. (1) A second note which re[a] Thus, where the indorsee of a cited that the makers "have pledged note bought of the maker a like secas collateral security" the origiond note for a separate consideration, nal purchase-money note and "seknowing that the indorser had deliv-curity for the same" was held not a ered it to the maker only for the pur- mere agreement collateral to the pose of renewal or payment of the original note, extending the time of first, and on its maturity brought payment and increasing the rate of suit on it against the indorser. It interest, but a new note for the balwas held, in an action also brought ance due on the first note, bearing by him against the indorser on the interest at the fixed rate, the first first note, that he was estopped to note to be held as collateral for the say that he did not accept it for the second; and the holder could not, purpose for which it was made. after maturity of the second note, Hooker v. Hubbard, 97 Mass. 175. bring suit on the first, and supple86. Hooker v. Hubbard, 102 Mass. ment its terms by applying to it the [c] Redelivery of old note to hold 239 (holding that a defendant who, increased rate of interest specified

[b] Where one of two accommodation indorsers of an overdue note gives his own note in renewal of the old note, with collaterals to secure the same, without the knowledge of the other indorser, the latter is thereby discharged. Kelty v. Jenkins, 1 Hilt. (N. Y.) 73.